Legislative Amendment Would Avoid Adverse Effects on Disabled Beneficiaries

HRD-87-135: Published: Sep 28, 1987. Publicly Released: Sep 28, 1987.

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GAO provided information on a Medicare amendment requiring certain employer-sponsored group health insurers that cover disabled beneficiaries to pay those beneficiaries' medical claims before Medicare, to determine whether the law applies to government-sponsored health plans.

GAO found that: (1) the Health Care Financing Administration believes that the law applies to government-sponsored plans; (2) administrators of federal, state, and local government-sponsored plans believe that it does not; (3) because of this disagreement, disabled beneficiaries with health coverage under Medicare and a government-sponsored plan could receive no payment for their claims; and (4) if the law does not apply to government-sponsored plans, projected Medicare savings will not be realized.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: Section 4034 of the Omnibus Budget Reconciliation Act of 1987 made the legislative change as GAO recommended.

    Matter: Congress should include in its fiscal year 1988 reconciliation bills an amendment to the Social Security Act so that there can be no doubt that Medicare is the secondary payer to government plans under section 1862(b)(4) to the same extent that the section applies to other health plans. This could be accomplished by adding the following underlined clause to section 1862(b)(4)(B)(i): "The term "large group health plan" has the meaning given such term in section 5000(b) of the Internal Revenue Code of 1986, and includes government entities." This change would leave governmental entities exempt from any tax penalties for noncompliance. However, the plan would be treated similarly to nongovernmental plans in that it would still be subject to double damages if Medicare is not properly treated as the secondary payer.


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